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HEALTH CARE DEPENDENT AUDIT RESULTS IN $5 MILLION PROJECTED COST AVOIDANCE FOR SCHOOL SYSTEM; SERIES OF INITIATIVES HAS SAVED $49 MILLION IN ADDITIONAL COSTS SINCE 2008

An audit initiated by Anne Arundel County Public Schools to identify and remove ineligible dependents from employee benefit plans will help the school system avoid more than $1.1 million in net costs this year and $5 million over the next five years.

The audit, conducted from February to July 2013 with the assistance of benefits consultant AonHewitt, was aimed at ensuring that only eligible dependents were enrolled in benefit plans, reducing both current and future plan liabilities, and ensuring that stringent verification processes are in place to prevent enrollment of ineligible dependents. While most audits show that between 5 percent and 7 percent of dependents are typically ineligible for coverage, AACPS’ ineligibility rate was 3.2 percent, providing evidence that the verification processes that were already in place were robust.

“Taxpayers of our county deserve to know that we are being efficient stewards of the financial resources entrusted to us,” said AACPS Chief Operating Officer Alex Szachnowicz. “This audit showed that we are, indeed, doing that and enabled us to identify dependents that should not be receiving coverage and purge them from our rolls. The results are significant savings to our school system, and reinforcement to the public that we are carrying out our fiscal obligations responsibly.”

The audit looked at 10,921 dependents of AACPS employees, and resulted in the removal of 358 from AACPS benefit plans.

Since 2011, AACPS has required enhanced levels of supporting documentation for any dependents added to a health-care plan upon the hiring of an employee or during an open enrollment period.

In the last five years, initiatives undertaken by the school system or approved by the Board of Education and employee bargaining units have resulted in more than $49 million in health-care related savings or cost avoidances. In addition to the most recent audit, those initiatives include:

  • $2 million through a 2008 renegotiation and extension of the contract with Carefirst.
  • $1.2 million through a 2011 renegotiation of the contract with Carefirst.
  • $30 million through new negotiated agreements with all four employee bargaining units approved in 2011.
  •  $10.8 million through approval of a new 2012 prescription drug contract. Anne Arundel County government piggybacked on that contract to save an additional $6.8 million.